Smoke Shop Insurance
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Smoke shops, vape stores and tobacco retailers face some pretty big risks.
They can be held liable for any damage caused by cheap vape batteries, or for fires that break out in their on-site lounges. There is also the threat of having their high end glass stock damaged.
Insurance Navy can help you get covered from companies like Progressive Commercial, Hartford and NEXT Insurance. The good news is, we compare prices from all carriers to find you the cheapest rate.
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Why do Smoke shops, Tobacco shops, and Vape shops need to have insurance?
In the context of running a smoke shop, tobacco and vape sellers have to be aware of the following risks while at work:
Accidental injuries to customers while they are in the shop, like the typical slip and fall injuries, which the shop is liable for
Accidental injuries to employees while they are at work, also like typical slip and fall injuries
A tobacco or vape product that has been recalled caused a customer to get sick.
Regular fire hazard risks if the shop has a smoke lounge with the constant clicking of lighters
Missing or stolen inventory by criminals and employees
Criminal damage like break-ins and vandalism
Forgery, fraud, and employee dishonesty
Products, like lighters that can injure customers
Weather damage like hail and wind can damage the shop building.
How much does Smoke and Tobacco store insurance cost?
Smoke shop insurance costs can have wide ranges. The price you'll pay depends on a few key factors. Factors such as how much inventory you're carrying, whether smoking is allowed in the shop, and your claims history.
You can expect to pay between $400 and $1,200 per year for general liability insurance with a $1 million per-incident limit.
A business owners policy bundling all coverages, liability, property, and business interruption can cost anywhere from $750 to $2,500 annually. Shops with smoking lounges are looking at a 15-30% increase in premiums because of the fire risk.
When it comes to choosing a policy for your smoke shops, you've got a handful of carriers to choose from.
But, Insurance Navy does all the comparison shopping for your from top rated carriers like the Hartford, Progressive Commercial, Nationwide, and some smaller specialty insurers like NEXT Insurance and Hiscox.
What types of insurance do Smoke, Tobacco, and Vape shops need?
When smoke shop owners put together their insurance policies, they start with these essential commercial insurance coverages based on the most common risks and hazards.
General liability insurance
Liability insurance covers the cost of any accidents in your smoke shop that end up hurting your customers or employees.
In Illinois, if you have employees you're required by law to carry some level of liability coverage. A slip and fall accident in a smoke shop can easily cost $20,000 to $50,000 in medical bills and legal fees.
Anything from product demos gone wrong to broken glass pipes and overcrowded lounges all fall under the liability coverage umbrella.
Most smoke shops carry a million dollars per occurrence, and a two million dollar aggregate limit. Your annual premiums will only run you $400 to $1,500, depending on customer volume and square footage.
Product liability insurance
Product liability is what protects you from lawsuits when one of the products you're selling turns out to be defective and injures a customer.
Vape batteries have been known to cause some pretty serious fires and explosions, costing smoke shops upwards of $100,000.
The F.D.A. has regulatory control over tobacco and vape products. Selling something that's been recalled or doesn't come with the right warning labels leaves you exposed to liability.
Defective lighters, vape mods and e-liquids are all common sources of product liability claims. You can often get product liability added on to a general liability policy or as a rider for anywhere from $200 to $600 annually.
Workers' compensation insurance
If you're running a smoke shop with employees, you're usually required to carry workers comp. Illinois is a state that requires workers comp and you're not allowed to hire your first employee without it. Texas is the only state where it's optional.
Cuts from broken glass, repetitive strain and respiratory issues are just a few of the common hazards for smoke shop employees.
Workers comp covers medical bills, lost wages, and some disability payments. Your premiums will be calculated based on how much you pay your employees.
Commercial property insurance
Commercial property insurance is what covers your building, fixtures, inventory and equipment against fire, theft, vandalism, weather damage. Smoke shops are at a higher risk of fire thanks to lighters, matches and smoking lounges.
If you're carrying $50,000 in glass pipes and $30,000 in tobacco products, you'll need to carry at least $100,000 in property damage coverage.
Business interruption coverage will replace lost income while your business is closed to make repairs. The average property insurance claim for a retail business in 2023 was around $42,000.
Additional Smoke Shop Insurance coverage
Inland marine insurance
Inland marine insurance is a must have if you're shipping a lot of glassware. This type of inventory does tend to get broken during shipping. Think about glass pipes and water pipes getting tossed around in transit.
If you're getting in new stock in the neighborhood of $10,000+ a month, inland marine will cover you for any damage that happens during loading and unloading as well as the actual delivery.
Your standard property insurance won't cover this. It costs anywhere from $200 to $500 a year, depending on how much inventory your business is receiving.
Business owner policy
For most smoke shops with a turnover of under $500 000 and less than 10 staff, a business owner's policy is the most cost effective option.
This bundles general liability coverage, property insurance and business interruption coverage. You can get a nice 10-15% discount compared to buying each policy separately.